The College Board announced today that college prices for the 2009-10 academic year continue to rise as state funding and endowment values decline. The financial difficulties facing households across the nation are putting increased pressure on financial aid budgets.

With the economy struggling, parents and students dared to hope this year might offer a break from rising college costs. Instead, they got another sharp increase.

Average tuition at four-year public colleges in the U.S. climbed 6.5 percent, or $429, to $7,020 this fall as schools apologetically passed on much of their own financial problems, according to an annual report from the College Board, released Tuesday. At private colleges, tuition rose 4.4 percent, or $1,096, to $26,273.

From there it turned into articles talking about how universities were taking advantage of the students and families. At least the article that appeared in the New York Times got the real reason right – here is paragraph 2:

Hit hard by state budget cuts, four-year public colleges raised tuition and fees by an average of 6.5 percent last year. Prices at private colleges rose 4.4 percent, according to a report issued Tuesday by the College Board.

“Given the financial hardship of the country, it’s simply astonishing that colleges and universities would have this kind of increases,” Mr. Callan said. “It tells you that higher education is still a seller’s market. The level of debt we’re asking people to undertake is unsustainable.

I’m sorry, but give me a break. I totally understand the tuition problem. My university is going to raise tuition by 30% over the course of two years. Ouch. That will certainly strain students that don’t have financial aid. But what exactly were people expecting?

The state of Washington cut almost 30% of the UW budget. The voters in Washington made it clear that there were other priorities. So, UW has two choices: shrink by 30% in 6 months (about the length of time we knew what was going to happen). Shrinking by 30% is certainly possible – but it would be huge. We’d have to take about 30% less students than we do now – that probably would mean no incoming students this year at all (or we would have to kick out students that were already here), fire 30% of the faculty, close lots of departments. Probably have to completely kill off research. Actually, that would help with firing 30% of the faculty – most of us would just leave as fast as we could. Students who came to a major research university for learning would now be at what was basically a teaching college full of very pissed off professors – not what they signed up for. So Seattle raised tuition by 30% and took a 6% over all cut to the operating budget. All signs point to the same thing happening in the next two year budget as stimulus money disappears.

So look – we like to call these things public universities – but that implies public support. Frankly, the more the state backs out of its implied contract with the university, the more like a private university these institutions will look. At some point the state support will be small enough that the universities will want to change their relationship with the state. Heck, why deal with the oversight if they aren’t getting anything in return for it!?

Somewhere out there there is a year-by-year trend plot of state support of universities. It has been steadily falling for over 20 years. This last year was particularly bad, but not really that different from the trend overall. California is at risk of destroying one of the best university systems in the country over this very same issue.

Want to keep tuition down? Keep public universities accessible? Don’t just yell “cut costs, get rid of waste” at the universities. Make sure your state legislature continues to support the university as well. The budget has to balance. If the state gives less, then that extra money has to come from somewhere!

Ah, the soap box. How I have missed thee.

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Also private universities will be raising rates because of their reliance on endowment that has been hit hard by the financial crisis.

But I guess what I finding interesting, and don’t understand, is why (outside of the recent financial crisis) tuitions have been climbing so fast over the last, say, decade (nearly doubling at 4 year institutions)? (And where is all the money going?!?! Can I get some?)

Dave – I have no idea in general, but it is possible to look at UW and extrapolate. There is a plot somewhere (that I could not find for this – but UW has shown it many times) that shows the state funding in constant dollars for UW. It has been going down for over 20 years. The drop this year was quite large – but less than over the past 20 years or so total. In short, this has been going on for a long time. So some of the tutition increases have been happening because of the long-term trend in state financing. Another reason is inflation, of course. And lastly, it was happening because universities were trying to do more and hire more people! Apply for an RRF!

I found that story irritating because they thought dT/dt of $400 was more than dT/dt of $1000 simply because the latter was on top of already higher tuition. Sorry, but those students pay with dollars, not percents.

To address the inflation issue in the discussion, I looked at the R1 university tuition inflation issue last year, comparing the inflation-corrected tuition (and room and board) to the inflation corrected state funds:

Although it is true that the state funding went down over the 38 year period I looked at, at most $1500 of the $7000 tuition increase was due to the decline in state funding. That money is going to pay for new facilities, higher salaries for faculty, MUCH higher health insurance rates, increased numbers of administrators, and reduced teaching time to be sure the research money comes in.

CCPhysicist – I don’t know exactly what the mix is with the R1 universities, but I look at what is happening here at UW and in Ca – the cut in the budget is 30%. For the first time ever that puts tuition as the #1 source of funding for student teaching.

UW, at least, has its budget roughtly divided into three sources: the hospital, grants from research, and then the so-called general fund which includes state money and tutition as its largest components. This last bit is where most (I think the number i heard was close to 80%) comes from. Some of it goes to paying for research – for example, I’m expected to spend 50% of my time on research and 50% of my time on teaching, my 9 month salary comes from that last third (2 months of pay – over the summer – are from grant submissions I make – Washington doesn’t allow me to be paid for the 12 month for some odd reason – so I get 12 months of pay over 11, whatever). The research money that comes in goes to facilities, etc., so students do get something for that (it is my understanding that most undergrad programs require some independent research as part of their degree). There was a 26% cut to the state portion of that latter third. Faced with a 30% cut there isn’t much to do. If you want to make things more efficient, that is fine, but you can’t do that with a 30% cut in one year. I’m sure there is waste at UW – but I seriously doubt there is 30% waste. Ca is in a similar position right now – forced vacations are not the way to run this.

As far as faculty salaries are concerned, there are several ways to measure this. One is to look at peer institutions and see how well you are doing compared to them. The other is to ask what would a faculty member be worth on the open market. For a university to remain competitive and attract good people they have to keep an eye on both of those things.

I think that fee increases at any level of education sucks! However it is still a business after all and they are in the want and need of making money. They have to pay their employees and administrators and in order to keep the quality of those things they have to be able to meet their demands. Look at all the education employees that are discussing striking because the cuts are hurting them and the only avenue for the schools are to make more money to meet those demands.

There is another way – the state can increase its funding. For public universities the funding comes from a mix: tuition and state support. If one goes down the other must go up or cuts have to be made. This year state funding took a huge hit. Thus, tuition was raised – in most cases not enough to take up all the slack, so cuts had to be made.